Nelson Peltz Builds Up Stake In Sysco

Nelson Peltz and another director have been buying shares of this food distributor.

Those purchases followed the announced expansion of the board.

The share price has inched higher in the past week.

Conventional wisdom says that insiders and 10 percent owners really only buy shares of a company for one reason — they believe the stock price will rise and they want to profit from it. So insider buying can be an encouraging signal for potential investors, particularly in an overpriced market or after disappointing news. Case in point: recent notable buys at SYSCO Corporation (NYSE: SYY).

Two directors, one of them activist investor and fund manager Nelson Peltz, bought a combined total of more than 1.8 million shares of this food products distributor in the past week. The share prices ranged from $53.55 to $54.06, for a total of almost $95.5 million. Note that these two directors were among insiders selling shares earlier in the month.

These buy transactions came in the wake of news about the appointment of a new director, expanding the board to 15 members. Furthermore, earlier this month, BMO Capital Markets pointed to Sysco as one company with little to fear from Amazon.

Sysco currently has a market capitalization of more than $28 billion. Short interest is about 3 percent of the float, and the consensus recommendation of analysts is to hold shares. The share price is up around 2 percent in the past week but also more than 2 percent lower than at the beginning of the year. Shares traded on Wednesday at $54.40, above the share price of the most recent insider purchases.